Inflation has taken the lead as the biggest headache for family offices, replacing trade wars and tariffs. That is the takeaway from Citigroup Inc.'s annual global family office survey of 350 firms across more than 40 countries in June and July. Andy Sieg, the New York based head of wealth, put it plainly: "These are very successful individuals and families, so one might think, 'Hey, they have so much money, why would they care?'" He added, "They're very aware if aspects of their lifestyle are becoming more expensive."
Right behind inflation, family offices pointed to changes in interest rates and the stability of the global financial system. The mix hints at broader unease about the economy under the strain of higher prices and war. Bloomberg Economics data show inflation running above 3% in three of the four biggest world economies, a setup that has kept rates elevated and cooled growth.
Despite the worries, performance has been solid: more than 90% said their portfolios were up this year, and nearly one in two boosted their allocations to listed stocks during the first half. Explaining the tilt, Dawn Nordberg, who leads integrated client solutions and oversees the global family office at Citi, said, "We saw families allocate a bit more capital to public equities because when looking for growth, stability, flexibility, nothing can beat out the US corporate." Public stocks also came out as the preferred spot for future net allocations, a shift Sieg linked to strong recent returns and questions around private market valuations, particularly for holdings that might be affected by rule changes or other factors investors believe are outside their control.
Inflation jitters are also reviving interest in gold. Sieg said nearly every client conversation now includes the precious metal, which was not the case two years ago. As he put it, "Global families who in prior years would've been talking about currency pairs are now realizing that a lot of the developed world is in a similar place with a tough fiscal position and rising inflation, and maybe the currency of the day is gold." To serve that interest, Citigroup is scaling up its vault capabilities and has recently joined a small circle of banks that offer vaulting and clearing in London, the city that anchors the global gold market.
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The wealthiest families are favoring liquid, broad based public stocks and giving gold fresh attention, while watching interest rates and overall financial system health. That points to a playbook focused on growth and flexibility in a world where inflation is sticky and borrowing costs remain high.
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